The charity sector has been navigating a period of significant change following the general election in July 2024.
Labour’s election manifesto included a pledge to work in partnership with civil society and the new Labour Government showed a promising commitment to this pledge, with several cabinet ministers having backgrounds in the charity sector and other ministers with lived experience being appointed at the heart of decision-making (for example, James Timpson as prisons minister).
The King’s Speech
The King’s Speech, which outlined the legislative agenda of the new Government, included several key bills that have the potential to impact charities positively. These included:
- Mental health reform: the Mental Health Act will be modernised giving mental health the same attention and focus as physical health.
- Violence against women and girls: a Crime and Policing Bill will aim to halve violence against women and girls through measures such as having specialist courts to deal with rape cases, increased powers for police to deal with misogyny, and new rights and protections for whistle-blowers.
- Energy: a new Energy Bill intends to create a publicly owned company (with the “Ronseal” name of “Great British Energy”) which will invest in renewable energies to help the UK to meet its climate goals and tackle the global climate challenge.
Despite these positive elements, some charity leaders criticised the King’s Speech for failing to address a number of pressing issues for the sector, such as funding cuts and the need for more comprehensive support for charities. In particular, proposals regarding adult social care reform were limited, there were no provisions dealing with local authority finances and the following proposals were seen as potentially introducing greater pressures on charities:
- Employment: then Employment Rights Bill will introduce new rights for workers from day one, leading to inevitable rises in staff costs and anxiety for some charities already struggling to make ends meet.
- VAT on private school fees: arguably the measure that has consumed the most media attention is the proposal to remove the VAT exemption for private school fees (many of which enjoy charitable status). The full details are still being worked out, but the Government’s current intention is to implement the new rules from January 2025.
Civil Society and the Labour Government
In advance of the Chancellor’s first budget in October 2024, Civil Society sent an open letter to the Government calling for it to encourage philanthropy, reinstate mandatory reporting of charitable giving by companies, increase charity tax limits, consult on the introduction of VAT relief on charitable donations and donated goods, extend charitable tax reliefs to wholly-owned charity trading subsidiaries, confirm there will be funding for HMRC to continue its review of Gift Aid, and provide greater clarity on the matter of charitable business rates relief for private schools. More broadly, the letter set out proposals for investing in society for the longer-term benefit of all, including providing the Charity Commission with sufficient funding to improve its efficiency and effectiveness.
Just two weeks before the budget, the Government announced the creation of a Civil Society Covenant to begin the partnership between government and Civil Society, outlined in Labour’s election manifesto. The new Covenant is designed to harness the knowledge and expertise of those working in the charity and social venture sector and was developed in consultation with Civil Society bodies NCVO and ACEVO. The summary of the Covenant announces the Government’s commitment to “delivering a decade of national renewal that will only be possible with a vibrant, thriving civil society”. The Covenant itself is based around four main principles: recognition, partnership, participation and transparency. There will be accountability for service delivery and implementing and sustaining change. How that will work in practice is yet to be seen and no doubt further details will emerge over the coming months as to exactly how the partnership between government and Civil Society will operate.
The Birketts view
The new Labour Government faces many complex issues and whilst the content of the King’s Speech and the new Civil Society Covenant suggest a promising start, the charity sector remains, on the whole, cautious (perhaps bordering on cautiously optimistic).
The open letter from Civil Society underscores the sector’s call for greater investment and clearer policies to ensure long-term benefits for all. Comprehensive support and sustainable funding solutions will be required, and the coming months will be crucial in determining whether the Government can live up to its promises and effectively support the charity sector in these challenging times.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at October 2024.